Legal Services for Co-operatives

The legal needs of a co-operative association, or co-op, may vary depending upon the nature of the co-op including its business, size and structure.

Whether your co-op is an employee, consumer or supplier co-operative, a buying group, a Community Economic Development Investment Fund, or a co-operative for a particular use (such as for a community utility or a commonly owned property) it may from time to time benefit from advice from knowledgeable professionals attuned to the unique challenges co-ops face.

Co-ops in today’s world often delicately balance the need to conduct business in the changing private sector against fulfilling the principles of operating on a co-operative basis. For that reason, Patterson Law has established a Co-operative Law Practice Group to better serve the legal needs of the co-operative sector.

Financing your Co-op

As with any business, a co-op may from time to time require financing to grow or fulfill its goals.

Financing a co-op may be arranged in a variety of different ways including the following:

• Borrowing: Depending upon the size and nature of collateral available to a co-op, it may be able to borrow funds from commercial lenders such as a credit union. In pursuing such a financing it is important to be mindful of particular requirements for co-ops which may not be required in other private businesses, including the need for approval of the members and the Inspector of Co-operatives in some instances.

• Debt Owing to Members: The members of the co-op may also authorize borrowing from the members themselves at specific rates of interest and for definite periods of time. Any such debt terms should be carefully prepared to ensure adequate protection and clarity by those involved.

• Preferred Shares: A co-op may create preferred shares which may be used as an investment tool. Although preferred shares may carry the right to vote in limited circumstances where the legislation deems it necessary to protect the holders of such shares, generally they do not have voting rights. The other terms of the preferred shares should be carefully crafted to fit the needs of the co-op and the investor, and to anticipate issues including the divesting of the shareholder of his/her interest.

Growing your Co-op in today’s world

Today’s business world contains many opportunities to grow including through joint ventures, mergers or business acquisitions. Having valuable legal advice to assist in performing due diligence, drafting clear and comprehensive agreements and guiding you in anticipating legal issues specific to the co-op structure to ensure your success is essential in any such undertaking.

Governing your Co-op

The likelihood of success of your co-op is enhanced when your co-op has the proper by-laws and policies in place to assure proper governance practices.

Patterson Law can assist you in reviewing or drafting proper by-laws and policies to deal with matters including the role of directors, qualification of members and directors, removal of directors, fiduciary duties of directors, Board accountability to members, securities law compliance, conflicts of interest, withdrawal of members, payout of equity, succession planning and risk management.

Additionally, Patterson Law’s Co-operative Law Practice Group can assist in ensuring that your co-op follows the proper practices and procedures to comply with the Co-operative Associations Act, its by-laws, securities laws, the Income Tax Act and other applicable laws including identifying situations which require the approval of the members by special resolution, and filing the appropriate documentation from time to time on your behalf with the Inspector of Co-operatives and Registrar of Joint Stock Companies.

Operational matters

Co-ops are presented with many of the same operational decisions as other private sector businesses, many of which require legal advice from time to time including the following:

• Human Resource Matters
• Employment Matters
• Drafting of contracts including leases and supply contracts
• Taxation
• Insolvency

Patterson Law’s role in your Co-op

A healthy network of support can help a co-op in making decisions and continuing to grow. Our lawyers would be pleased to work as part of your team of professional advisors, including the knowledgeable contacts at the Nova Scotia Co-operative Council, your accountant and your credit union or other lender to continue to grow your co-op in today’s world.

Patterson Law is a full service firm of lawyers with a wealth of experience and knowledge. In particular, our Co-operative Law Practice Group brings with it many years of experience in the co-op sector and the legal issues facing co-ops as explored in this brochure including as legal counsel to the Nova Scotia Co-operative Council.

Patterson Law is also a member of the national CoopZone Legal Network. Please contact any member of our Co-operative Law Practice Group at any time to assist your co-op.

Disclaimer:This memorandum is not intended to contain advice specific to your situation. Your use of this memorandum should be reviewed with your legal adviser